Telecom operators have urged the government to suspend the industry’s annual contribution of around Rs10 billion to the Universal Service Fund (USF) and 0.5 percent to the R&D Fund (Ignite) for two years in order to partially mitigate the “digital emergency” caused by an exponential increase in the cost of doing business under the current economic situation.
Telecom operators have recommended to the federal government, via the Ministry of Information Technology and Telecommunications, that some measures to improve fiscal space for the industry be implemented immediately.
Industry-specific measures within policymakers’ control that provide the necessary space without affecting the overall budgetary positions of the wider economy are of immediate utility in this context. As part of the package of such measures, they have requested that the government suspend the industry’s annual contribution of around Rs10 billion, which comprises 1.5 percent of its AGR towards the USF and 0.5 percent in R&D fund, for two years (Ignite).
According to industry experts, both of these funds have historically accumulated a balance of around Rs55 billion parked in the Federal Consolidated Fund (FCF), in addition to substantial regular annual funding accumulated in the Ministry of IT&T’s non-lapsable PLA account.
The telecom industry has argued that current funding levels are adequate to continue programmes for the next two years without major disruption. Operators also believe that if the fund falls short during the temporary suspension, it can be restarted to ensure the USF’s smooth operation.
The USF was established in 2007 as a result of a 2006 Telecom Act amendment to provide cellular, broadband internet, fibre optics, and other telecommunications services to underserved areas. All telecommunications companies have contributed 1.5 percent of their revenues to the USF.